i4i: Word appeal hearing was ‘repackage’ of trial

Interest in Microsoft’s appeal Wednesday of a ban on selling Word was so big that the judges moved the hearing into a larger, ceremonial courtroom capable of holding 200 people.

But, in the mind of its opponents, Microsoft didn’t bring anything new to the courtroom.

“It was a repackage of what happened at trial,” said i4i Inc.’s Loudon Owen, chairman of the company that sued Microsoft two years ago for patent infringement. “And to our mind, there were no surprises.”

The two companies argued for about 39 minutes each – more than double the normally allotted 15 minutes – before a three-judge panel Wednesday morning at the Court of Appeals for the Federal Circuit in Washington, D.C.

That elongated time showed the Federal Circuit’s increased interest in the case, Microsoft said.

Though the hearing came as part of an expedited schedule, it could take the judges several months to decide whether, as a district court judge and jury ruled, Microsoft really did willingly infringe i4i’s patent on a method of processing custom XML in Word.

In the meantime, Microsoft can continue selling Word. Three weeks ago, the Federal Circuit granted Microsoft a stay on the Texas district court’s injunction that would prohibit the software giant from selling its ubiquitous software, in its current form, in the United States.

“We’re very eager to get a final determination,” Owen said, “because every day the injunction isn’t in place, we’re suffering monetary and strategic damage.”

Representatives from neither i4i nor Microsoft were able to talk in detail about the appeal hearing. But both Owen and his business partner, i4i founder Michel Vulpe, said they still felt confident they’ll win the appeal.

The judges, Owen and Vulpe said, were hard to read. Their pointed questions gave few clues of how they plan to rule.

“I think they were evenhanded, as they’re supposed to be,” Owen said. “But this is not our appeal – it’s Microsoft’s appeal.”

Vulpe said Microsoft seemed to focus more on broader patent issues than on the specifics of the i4i case. But he didn’t want to say more without first debriefing with i4i’s attorneys.

Of course, Microsoft is also confident in its stance.

“At today’s hearing,” Microsoft spokesman Kevin Kutz said, “we emphasized three points for why a reverse judgment or retrial is warranted: Courts need to construct claims properly, the patent is not valid and we do not infringe it, and common sense can’t be abandoned when it comes to damages calculation. We are pleased with how the hearing proceeded and we look forward to the court’s ruling.”

Microsoft’s lead attorney on the case, Matthew Powers, said the game changed when Microsoft was granted an appeal. During trial, a judge and jury hear a case based on facts, and make a judgment they feel is suited for the specific situation.

But during an appeal in front of the Federal Circuit, attorneys present their cases to expert patent-law judges who consider the law, and know their decision affects future patent litigation.

“It should be a very different argument,” Powers said. “It’s not about little guys versus big guys, it’s about the law.”

i4i is a small, Toronto-based company with just 30 employees. From the outside, i4i’s lawsuit may look like just another case of a small company suing a behemoth for copyright infringement.

The difference here is that the District Court for the Eastern District of Texas ruled that Microsoft willingly infringed i4i’s patent and that Microsoft not only owes i4i $290 million, but can no longer sell Word with custom XML functionality included.

“This case is critical not just for i4i but also so all entrepreneurs and inventors can enforce their property rights created by patents,” Owen later said in a statement. “Intellectual property is the lifeblood of invention.”

Microsoft says $290 million is far more than a reasonable amount for damages. The Tyler, Texas, jury and judge calculated the damages based on an industry survey Microsoft says was fundamentally flawed.

And the Redmond-based company says the lower court misconstrued the patent claim against it.